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Korean Journal of Financial Studies 2011;40(2):347-375.
Published online April 30, 2011.
Managerial Entrenchment and Valuation Effects of Toehold Acquisitions
Ki Beom Binh, Moo Kwon Jung, Jeong Sun
경영진 안주 행태와 발판매수의 가치 효과에 관한 연구
빈기범, 정무권, 윤정선
This paper examines stock market reactions to toehold acquisitions in the Korean stock market to determine whether they depend on factors related to the ownership structure of the target firms such as the issuance of the dual-class stock and the affiliation with chaebols. We also examine the voting premium responses to toehold acquisitions for targets with no-voting preferred stocks which has largely remained unexplored. We find that whereas single-class targets show positive cumulative abnormal returns regardless of chaebol affiliation, dual-class targets with no-voting shares exhibit positive cumulative abnormal returns only if they are not affiliated with chaebols. Furthermore, dual-class targets exhibit an increase in the voting premium. Our findings contrast with existing research emphasizing that the positive market reactions to toehold acquisitions reflect the anticipation of an increase in the fundamental value of the target firms as a consequence of monitoring or control- related events by toeholders. We argue that although anticipated control-related or noncontrol-related events contribute to the shareholder value of the target firms, these effects are countervailed when the incumbent management can effectively resist those challenges.
Key Words: 경영자 안주 행태,경영자 저항,발판매수,의결권프리미엄,차등권리주식,Dual-class Stocks,Entrenchment,Managerial Resistance,Toehold Acquisitions,Voting Premium
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